Back around the turn of the millenia, I was working in San Francisco developing proposals, feasibility studies and environmental review documents for Bechtel, the century-plus aged firm that has been at the center of many of the most high-profile engineering feats of the 20th century (e.g., Hoover Dam, Channel Tunnel, Boston’s “Big Dig”, Jubail Industrial City, Yucca Mountain nuclear storage project) and the company that provided executive staff for the Reagan administration (e.g., Secretary of State George Schultz, a Bechtel Director and economist also on the board of one of their finance groups, and Secretary of Defense Caspar Weinberger, a former Bechtel VP and Director). Bechtel has been wired in to government contracts for decades. In the 1930s, Bechtel constructed the 8-mile long Bay Bridge, in partnership with another San Francisco firm, McCone Engineering, and the Bechtel-McCone venture eventually incorporated as Bechtel Corporation. John McCone sold his interests in the firm after World War II, but he went on to head the Atomic Energy Commission and later the Central Intelligence Agency.
Bechtel, which was founded in 1898 and hugely important to the expansion into the American west of highway and railroad infrastructure, is an S-type corporation, the third largest privately-owned company in the U.S., with annual revenues of $30 billion, and the Bechtel Group of seven divisions have projects going on around the globe. The CEO is Riley Bechtel, great-grandson of the firm’s founder and one of America’s 50 wealthiest men, which is testimony to the extent to which this Goliath concern has remained a personal family endeavor, and one with significant clout in U.S. politics and domestic and foreign policy. It is not that the Bechtels are limelight types – in fact, the executive personnel of Bechtel remain purposely out of the public glare – but it is well known that they are big contributors to the Republican Party. Bechtel hires high-profile people to represent the firm in public – former NASA astronauts, retired NFL football stars – who provide a Teflon front for their operations, most all of which are awe inspiring, because they don’t do anything that isn’t big.
Bechtel, I must confess, is one of my favorite employments among all of the many I have had. (I am a project guy.) It was certainly not that I was in line with the company politically, and it was far from the easiest place to work. (One proposal writer I worked with often at Bechtel would respond to every proposal kickoff meeting by saying “We are so hosed!”) In fact, the firm has its own mythology, from visits of foreign dignitaries (e.g., Mikhail Gorbechev) to spectacular individual meltdowns, like the engineer carted away by the boys in the white coats after he was found lying under his desk in a fetal position. But Bechtel is also an exciting place to be around because of its fore-mentioned bigness. It is a big-budget, first class operation on many levels, not ostentatious in its corporate behaviors, but appropriate in its execution of routine procedures to support and protect its employees, and to develop quality deliverables. I have never worked at a firm that commits anything like the resources Bechtel was committing, at least when I was there, to producing high quality products. (The division I was contracted with left San Francisco in the early part of the last decade and relocated operations to Maryland, closer to the action in D.C. and further away from the Bay Area’s anti-Bechtel demonstrators.)
Bechtel’s approach to major engineering and construction is a mirror of its executive bearing, meaning that over time the company has become almost exclusively a program management firm. This means that they provide high-level management and control of a number of projects and a number of subcontractors to ensure that all project components come together to meet contract requirements and performance standards. The company claims to have 49,000 people working on projects in 50 countries, but those widely-quoted numbers must include the employees of subcontractors who are not directly on the Bechtel payroll. In my experience, the only actual project people around were a hundred or so design engineers, a bunch of parked nuclear guys, and the “BSD” (Big Swinging Dick) project managers, which to Bechtel’s credit included some highly capable women, who only showed up at the HQ to work on bids. Bechtel takes the macro approach to long-term investments in heavy civil infrastructure projects, and their financial clout is so significant that if there are profits to be made from investment they will tap into investor resources to make big projects happen. Bechtel is one of the few D-BOM firms in the world, i.e., companies that “Design-Build, Operate and Maintain” projects like airports and rail services. My sense, based on the projects I helped propose for, is that there is no engineering/construction challenge that Bechtel will back away from if there are profits to be made. Most A/E/C firms won’t even utter the word “risk”, fearful of being financially responsible for assuming any. Bechtel seems undaunted either by inherent project risk potentials or public pressures, and the company’s early commitment to nuclear power illustrates this.
Just 10 years after the passage of the Atomic Energy Act of 1946, Bechtel built the first nuclear power plant in the United States, only the second in the world. Bechtel’s was in Illinois (the horrendously named “Dresden-1″). This headlong dive into new and unfamiliar technology of a high-risk nature was the subject of considerable press in 1963, when company contractors installed a nuclear-reactor vessel backwards in the construction of the San Onofre Nuclear Generating Station in California. Despite such hiccups, nuclear power plants (106 now in the U.S. alone) were built and operated successfully for a couple decades, until the Three Mile Island nuclear facility incident in 1979, and the auspiciously timed release of the nuclear near-disaster film The China Syndrome.As cautionary art morphed disastrously close to life, construction of nuclear power facilities came to an absolute halt.
Bechtel held onto its nuclear engineers, and even 20-plus years later, when I was around, they haunted the halls of 50 Beale. They were highly educated, highly specialized people whose resumes we would be given for proposals on heavy civil infrastructure projects, for which they were not a good sell. Bechtel Infrastructure (BINFRA) did beautiful proposals filled with resumes of bright old men, who asked that we not mention their PhDs lest they be considered “academic” and not “actual”, but it rarely worked. BINFRA convinced themselves that their low win rate was all price related, which was no doubt partly the case, but mostly we had a bunch of square pegs trying to fit into round holes. It sometimes worked for co-generation plants and other energy-related concerns, but for most of our purposes they were dead wood.
Still, Bechtel remained committed to nuclear. Until 2007, Bechtel and San Diego firm SAIC operated the controversial Department of Energy nuclear waste depository project at Yucca Mountain (90 miles northwest of Las Vegas), then in the process of proposing for contract renewal lost to USA Repository Services (USA-RS), a consortium of government contractors including URS Corporation, Shaw Corporation and Areva Federal Services LLC. In fact, Bechtel got out just in time because the incoming Obama administration killed funding for the project, and now there is a mere skeleton crew at the facility compared to the years that Bechtel-SAIC were its operators.
Bechtel’s interest, however, remained protected by political connections. While Bechtel was losing the Yucca Mountain contract, in 2007 the US Department of Energy awarded Bechtel partnership LLNS LLC the contract to operate Lawrence Livermore National Laboratory. In fact, through various partnerships Bechtel operates most of the US nuclear weapons facilities, including Los Alamos National Laboratory (design), Lawrence Livermore National Laboratory (design), Savannah River Site (nuclear materials), Hanford Site (nuclear materials), Pantex Plant (assembly/disassembly), Y-12 National Security Complex (nuclear materials), and the Nevada Test Site (subcritical testing).
Among the projects being worked on while I was at Bechtel was a containment structure for the Chernobylnuclear facility, with a goal of encasing the leaking radioactive heap for a thousand years, only a first step along the way toward mitigation of a perpetual environmental problem. This seems like a high back end price to pay for a technology that makes steam.
The Environmental Problem: Somehow the idea of using nuclear fission, and eventually nuclear fusion, to boil water, produce steam, drive turbines and produce direct current electricity has found its way back into the list of acceptable alternatives as an environmentally friendly solution. This bit of Houdini depends entirely on comparison to power generation through the burning of coal, which produces carbon emissions and is a primary contributor to rising levels of greenhouse gas (GHG) in our choking environment.
Financing such multi-billion dollar ventures is incumbent upon huge bonding capacities, like one only gets with firms like Bechtel, and while it is different in Europe power producers in the U.S. can build recovery of capital costs into their energy pricing. Once these monumental structures are up and running the cost of the fuel needed to produce the energy product is relatively low. Return on investment is largely determined by how efficiently the operator can construct the plant, commission it and get it into operation, and Bechtel has been one of the few companies with the resources to make this type of complex system get up and running “fast”, which in nuclear power terms means, say, 10 years.
While profit margins are nominally greater, and nuclear certainly produces lower GHG than coal burning plants, nuclear power plants also produce spent fuel rods that must be managed through recycling and permanent safe storage. These back end services are part of what Bechtel provided at Yucca Mountain and no doubt will offer on future federal contracts. Through mining operations, engineering and construction, decontamination, demolition and disposal contracts they own parts of the entire life cycle of uranium processing.
While Bechtel has been wired into the U.S. nuclear power industry from its inception and driven it forward through placement of individuals in important government positions, the Fukushima Daiichi nuclear power plant disaster reveals how incomprehensive the risk mitigation planning has been for these existing nuclear facilities. The current generation all rely on vast water resources so they are all sited on coast lines and waterways, which makes them inherently vulnerable to the type of earthquake and flood hazards experienced in Japan. It has been disheartening, much in the way the BP Gulf oil disaster was, to realize that the emergency response in Japan has been based on guesswork and few proven methods for responding to anything outside of the playbook of normal operations.
This, one senses, is another of the byproducts of energy policy driven by energy producers in all of their parts. Master business strategies race out ahead of actual events, with well-positioned corporations like Bechtel being able to move these faulty ships of commerce ahead through all challenges, even convincing the public that the focus on the benefits of nuclear power should be greater than the focus on its dangers. Public opinion polls have shown this to be a tough sell, even before the current disaster in Japan, and yet political connections seem to triumph.
The Obama administration is committed to the use of nuclear power plants to produce energy for the U.S. as if it is part of a responsible green approach.
In truth, it is a wired approach to federal contracting that benefits a few rich companies, like Bechtel, while strapping generations of Americans from here to eternity with the consequences of cleanup and maintenance of deadly byproduct. As one nuclear physicists commented in Huffington Post recently, “nuclear power is the most dangerous way ever conceived to boil water”. Perhaps better fusion facilities will be developed down the way, but as long as we are enriching uranium to create fuel cells for the purpose of capturing the energies of their decay, we will be reaping the harvest of corporate hubris and greed. And you can bet that when it is time to pass out the personal protective equipment, those same merchants of toxic profit will be there to punch the public ticket.